Incident: In 2023, the company achieved revenue of 816 million yuan, yoy +34.97%, net profit of 51.9569 million yuan, net profit of -71,215.5 million yuan in 2022, net profit of 52.2374 million yuan after deducting non-return to mother, and -668.072 million yuan in 2022. The results fell within the previously forecast range. 2024Q1 achieved revenue of 215 million yuan, yoy +37.60%, qoq -2.73%, net profit of 1997.62 million yuan, yoy +247.51%, qoq +174.99%, net profit of 19.6523 million yuan, yoy +242.79%, qoq +166.12%, in line with our expectations. At the same time, the company announced a profit distribution plan for 2023, which plans to distribute a cash dividend of 2 yuan (tax included) for every 10 shares.
The volume of anime IP derivatives is growing, and attention is being paid to the operation of new card machines. In 2023, the company's animation IP derivatives business achieved revenue of 259 million yuan, yoy +75.64%, gross profit margin of 41.16%, yoy+5.06 pct. Revenue growth was mainly due to the resumption of operations of card machines after the epidemic, and there was a steady increase in sales volume and store coverage, driving rapid revenue growth. The company actively reserves excellent IPs from around the world, while also accelerating Guochao IP cooperation and equipment research and development. At the end of 2023, the company launched the first self-developed Guochaofeng card machine “Three Kingdoms Fantasy Battle” to actively monitor the launch and operating efficiency of the new card machine. Looking ahead, we are optimistic that the company will continue to improve the operating efficiency of existing card machines, while enriching IP reserves and continuously launching new card machines to steadily increase market share, and it is expected that performance flexibility will continue to be unleashed.
Equipment sales: Demand for downstream procurement has increased, and overseas sales have achieved remarkable results. In 2023, the company's amusement equipment sales business achieved revenue of 398 million yuan, yoy +27.28%, gross profit margin of 26.86%, yoy-2.69pct. Revenue growth was mainly due to a significant increase in the desire of downstream customers to open playgrounds, active expansion of small and medium-sized playgrounds, driving demand. At the same time, the company actively expanded overseas regions. Overseas sales revenue reached 103 million yuan, yoy +10.05% in 2023. Looking ahead, we are optimistic that the company will actively explore overseas markets, and that equipment sales business revenue will maintain a steady growth trend driven by domestic and foreign demand.
Operational business: continuous improvement of operating efficiency, active optimization and improvement of profit levels. In 2023, the company's operating business achieved revenue of 131 million yuan, yoy +12.48%, of which: 1) Equipment cooperative operation achieved revenue of 0.24 million yuan, yoy +6.86%, gross profit margin of 58.72%, yoy+6.42pct, 2) playground operation achieved revenue of 108 million yuan, yoy +13.81%, gross profit margin of 1.06%, yoy+21.92pct. The gross margin improved significantly, but it still did not meet the company's expectations. In the future, the company will continue to adjust the playground operation business strategy, slow down investment in new self-operated playgrounds, optimize the processing of some stores that have not met expectations for a long time, and at the same time explore various cooperation models to develop the playground sector by providing asset-light and high-margin methods such as operation services and brand licensing, taking into account growth and profitability.
Profit forecast and investment rating: Considering that the pace of profit recovery from playground operations is slower than expected, we lowered the 2024-2025 EPS forecast and added the 2026 EPS forecast to 0.61/0.77/0.93 yuan (0.78/1.05 yuan before 2024-2025), corresponding to the current stock price PE of 26/20/17X, respectively. We are optimistic that the company's leading position in amusement equipment is stable, and the animation IP derivatives business has broad room for growth, which is expected to drive performance to continue its high growth trend and maintain a “buy” rating.
Risk warning: The development of anime IP derivatives falls short of expected risks, business recovery falls short of expectations, market competition increases risks, and the risk of macroeconomic fluctuations